WESTERN WIRE PRODUCTS,	)
	)
Complainant,	)
	)
v.	)		Appeal Number 01-34004
	)
RANDY HOLMAN, ASSESSOR,	)
JEFFERSON COUNTY, MISSOURI,	)
	)
Respondent.	)

DECISION AND ORDER

HOLDING

Decision of the Jefferson County Board of Equalization sustaining the assessment made by the Assessor, SET ASIDE, Hearing Officer finds true value in money for the subject property for tax year 2001 to be $2,114,000, assessed value of $704,670.

Complainant appeared by Counsel, Thomas J. Campbell, St. Louis, Missouri

Respondent appeared by Counsel, David P. Senkel, Hillsboro, Missouri.

Case heard and decided by Chief Hearing Officer, W. B. Tichenor.

ISSUES

The Commission takes this appeal to determine the true value in money for the subject machinery and equipment on January 1, 2001, specifically, what is the most probable price that could be commanded for the machinery and equipment in an open-market, competitive exchange with buyer and seller both acting knowledgeably and prudently?

SUMMARY

Complainant appeals the decision of the Jefferson County Board of Equalization which sustained the valuation of the subject property. The Assessor determined an appraised value of $3,737,100 (assessed value of $1,245,700, as personal property - machinery and equipment). Complainant proposed a value of $2,114,000 (assessed value of $704,670). Respondent proposed a value of $4,268,869 (assessed value of $1,422,957). A hearing was conducted on Wednesday, April 16, 2003, at the Jefferson County Courthouse, Hillsboro, Missouri.

The Hearing Officer, having considered all of the competent evidence upon the whole record, enters the following Decision and Order.

Complainant's Evidence

Complainant offered into evidence the following exhibits:

Exhibit A    Appraisal Report of Roger R. Chantal, ASA (Accredited Senior Appraiser)

Exhibit B    Original Asset List of Complainant's Fenton, Missouri facility.

Exhibit C    Listing of machinery located and operated in plant in Charleston, South Carolina.

Exhibit D    Itemized listing of certain assets listed in Exhibit B.

Exhibit E    Itemized listing of certain assets listed in Exhibit B.

Exhibit F    Supplemental Appraisal Report of Roger R. Chantal.

Exhibit G    Written Direct Testimony of Gene B. Young, President of Western Wire Products Company.

Exhibit H    Written Direct Testimony of Roger R. Chantal.

Exhibit I    Detail data sheet on Asset 121a of Exhibit A.

All Complainant's exhibits were received into evidence.

Complainant also offered in rebuttal the testimony of Mike Clark, President of L & M Publications. L & M Publications is the publisher of The Book, pricing guide for used industrial machinery and equipment.

Respondent's Evidence

Respondent offered into evidence the following exhibits:

Exhibit 1    Appraisal Report of Michael G. Boynton, Director of Assessments, Jefferson County, Missouri.

Exhibit 2A    Machinery and Equipment Spreadsheet.

Exhibit 2b    Machinery and Equipment Spreadsheet.

Exhibit 3    Cost Approach: Furniture/fixtures, computers, tooling.

Exhibit 4    Asset List dated December 12, 2001.

Exhibit 5    Asset List dated January 22, 2002.

Exhibit 6a    Affidavit of Gene Young.

Exhibit 6b    List verified by Mr. Young as being present at time of visit on January 15, 2002.

Exhibit 6c    Additional information on list of assets obtained on January 15, 2002.

Exhibit 7    Trend Index.

Exhibit 8    Administrative Notes.

Exhibit 9    Miscellaneous correspondence between Complainant and Respondent.

Exhibit 10    Photographic Inventory of assets on January 15, 2002.

Exhibit 11    Sales Comparable Data sheets.

Exhibit 12    Written Direct Testimony of Michael G. Boynton.

All Respondent's exhibits were received into evidence.

FINDINGS OF FACT

1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Jefferson County Board of Equalization.

2. The subject property consists of manufacturing machinery and equipment office machines and furniture and fixtures located at Complainant's facility at 770 Sun Park Drive, Fenton, Jefferson County, Missouri. The property is identified by Assessor's Account number 141465. The property includes, but is not limited to, air compressors, lathes, surface grinders, drill presses, shop presses, forklifts, tools, dies and various items of wire forming machinery utilized in the manufacturing of cotter keys, spring pins and various retaining and fastener devices utilized in numerous industries. There is nothing unique about the subject property for Complainant's type of manufacturing facility. Exhibits A, H - Q & A 15, & Exhibit 1.

Valuation by Complainant's Appraisal Expert

3. Complainant's expert listed the subject property as a total 521 entries. Individual entries may have contained more than one piece of machinery or equipment. There were 293 entries which were valued under the sales comparison approach utilizing sales data from L & M - The Book, Orion Research and Top Bid (241 entries valued under L & M; 51 entries valued under Orion and 1 item valued under Top Bid). These sources are generally utilized and relied upon by appraisers in the appraisal industry who do valuations of various types of machinery and equipment. Exhibits A & F. For the entire appraisal assignment 56.3% of the entries were valued under the sales comparison approach and 43.7% (228 entries) were valued by the cost approach. The valuation performed by Mr. Chantal reflected all of the personal property that is the subject of this appeal as of January 1, 2001. Tr. 22, Line 23 - Tr. 23, Line 1; Tr. 7, Lines 12-18.

4. The sales comparison methodology utilized by Mr. Chantal took sales of the items to be appraised and adjusted for time of sale if it was deemed necessary. The adjusted sales were then averaged to arrive at an indicate fair market value based upon the sales data. Exhibit H - Q & A 19.

5. The cost approach employed by Complainant's appraiser consisted of indexing the purchase price new (cost of original purchase by Complainant) of the item being appraised to arrive at an indicated replacement cost new. Depreciation was then applied utilizing the Marshall and Swift depreciation table for metal working equipment to arrive at any indicated fair market value. Exhibits A, F & H - Q & A 22.

6. The sales comparison and cost approaches developed by Mr. Chantal are recognized methodologies, within the machinery and equipment appraisal industry, that can be employed in the appraisal problem presented in the present appeal. The information, data and sources relied upon by Complainant's appraiser are the types of resources reasonably relied upon by experts in the field of machinery and equipment appraisal in forming opinions or inferences upon the subject and are generally recognized within the industry as being otherwise reliable for the purpose of appraising machinery and equipment.

7. Complainant's evidence was substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2001, to be $2,114,000, assessed value of $704,670, as proposed. See, DECISION, Complainant's Evidence Substantial and Persuasive to Establish Value Advocated, infra.

Valuation by Respondent's Appraisal Expert

8. Respondent's appraiser listed the subject manufacturing machinery and equipment as 365 total entries. Exhibits 2a & 2b. Computers, furniture and tooling were not included in these entries. Exhibit 3. Of the itemized entries of machinery and equipment 181 were identified to have been valued under the cost approach and and a sales listing method, 88 under an extraction or extrapolation methodology, 71 under cost approach and 25 under sales listing. Items of furniture, computers and tooling were valued by simply applying depreciation tables to original costs, from a list provided to Respondent by Complainant. Exhibit 3.

9. Respondent's evidence was not substantial and persuasive to rebut the presumption of correct assessment by the Board and establish the true value in money as of January 1, 2001, to be $4,268,869, assessed value of $1,422,957, as proposed. Respondent's evidence was not substantial and persuasive to affirm the value determined by the Assessor and sustained by the Board. See, DECISION, Respondent's Evidence Not Substantial and Persuasive to Establish Value Advocated, infra.

Use of Auction Data

10. Data on auction sales obtained from nationally recognized sources, including but not limited to, L & M Publications, Inc. (DataRef), Orion Research, Top Bid, is a type of information that is reasonably relied upon by machinery and equipment appraisal experts in forming opinions or inferences when performing appraisals and is recognized in the machinery and equipment appraisal field to be reliable for appraisal purposes. Use of such data by Complainant's appraiser in this case was appropriate. See, DECISION, Auction Data Appropriate Data For Use By Expert, infra; See also, T. G. Missouri v. White, STC Appeal No. 00-77001, Willing Seller/Willing Buyer and Machinery and Equipment Auctions, pp. 15-18 (December 11, 2001); Tr. 83, Line 6 - Tr. 96, Line 18.

Jurisdiction

The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo. The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Section 138.431.4, RSMo.

Prior Commission Decisions Affecting Value

In establishing the value of a parcel of real property the county assessor shall consider previous decisions of the county board of equalization, the state tax commission or a court of competent jurisdiction that affected the value of such parcel. Section 137.076, RSMo.

In counties within the first class where a taxpayer has appealed to the state tax commission the assessment of the taxpayer's property, real or personal, and that appeal has been successful, then in the next following and all subsequent years the basis upon which the assessor must base future assessments of the subject property shall be the basis established by the successful appeal and any increases must be established from that basis. Section 137.345.5, RSMo.

Board of Equalization Presumption

There is a presumption of validity, good faith and correctness of assessment by the County Board of Equalization. Hermel, Inc. v. STC, 564 S.W.2d 888, 895 (Mo. banc 1978); Chicago, Burlington & Quincy Railroad Co. v. STC, 436 S.W.2d 650, 656 (Mo. 1968); May Department Stores Co. v. STC, 308 S.W.2d 748, 759 (Mo. 1958).

The presumption in favor of the Board is not evidence. A presumption simply accepts something as true without any substantial proof to the contrary. In an evidentiary hearing before the Commission, the valuation determined by the Board, even if simply to sustain the value made by the Assessor (which is not presumed to be correct), is accepted as true only until and so long as there is no substantial evidence to the contrary.

No Presumption Assessor's Value Correct

There is no presumption that the assessor's valuation is correct. Section 138.431.3, RSMo.

Standard for Valuation

Section 137.115, RSMo 1994, requires that property be assessed based upon its true value in money which is defined as the price a property would bring when offered for sale by one willing or desirous to sell and bought by one who is willing or desirous to purchase but who is not compelled to do so. St. Joe Minerals Corp. v. State Tax Commission, 854 S.W.2d 526, 529 (Mo. App. E.D. 1993); Missouri Baptist Children's Home v. State Tax Commission, 867 S.W.2d 510, 512 (Mo. banc 1993). It is the fair market value of the subject property on the valuation date. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, 897 (Mo. banc 1978).

Market Value

Market value is the most probable price in terms of money which a property should bring in competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeable and assuming the price is not affected by undue stimulus.

Implicit in this definition is the consummation of a sale as of a specific date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated.

2. Both parties are well informed and well advised, and each acting in what they consider their own best interests.

3. A reasonable time is allowed for exposure in the open market.

4. Payment is made in cash or its equivalent.

5. Financing, if any, is on terms generally available in the Community at the specified date and typical for the property type in its locale.

6. The price represents a normal consideration for the property sold unaffected by special financing amounts and/or terms, services, fees, costs, or credits incurred in the transaction.

Real Estate Appraisal Terminology, Society of Real Estate Appraisers, Revised Edition, 1984; See also, Real Estate Valuation in Litigation, J. D. Eaton, M.A.I., American Institute of Real Estate Appraisers, 1982, pp. 4-5; Property Appraisal and Assessment Administration, International Association of Assessing Officers, 1990, pp. 79-80; Uniform Standards of Professional Appraisal Practice, Glossary.

Duty to Investigate

In order to investigate appeals filed with the Commission, the Hearing Officer has the duty to inquire of the owner of the property or of any other party to the appeal regarding any matter or issue relevant to the valuation, subclassification or assessment of the property. The Hearing Officer's decision regarding the assessment or valuation of the property may be based solely upon its inquiry and any evidence presented by the parties, or based solely upon evidence presented by the parties. Section 138.430.2, RSMo.

Weight to be Given Evidence

The Hearing Officer is not bound by any single formula, rule or method in determining true value in money, but is free to consider all pertinent facts and estimates and give them such weight as reasonably they may be deemed entitled. The relative weight to be accorded any relevant factor in a particular case is for the Hearing Officer to decide. St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655, 659 (Mo. banc 1977); St. Louis County v. STC, 515 S.W.2d 446, 450 (Mo. 1974); Chicago, Burlington & Quincy Railroad Company v. STC, 436 S.W.2d 650 (Mo. 1968).

Trier of Fact

The Hearing Officer as the trier of fact may consider the testimony of an expert witness and give it as much weight and credit as he may deem it entitled to when viewed in connection with all other circumstances. The Hearing Officer is not bound by the opinions of experts who testify on the issue of reasonable value, but may believe all or none of the expert's testimony and accept it in part or reject it in part. St. Louis County v. Boatmen's Trust Co., 857 S.W.2d 453, 457 (Mo. App. E.D. 1993); Vincent by Vincent v. Johnson, 833 S.W.2d 859, 865 (Mo. 1992); Beardsley v. Beardsley, 819 S.W.2d 400, 403 (Mo. App. 1991); Curnow v. Sloan, 625 S.W.2d 605, 607 (Mo. banc 1981).

Opinion Testimony by Experts

If specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert on that subject, by knowledge, skill, experience, training, or education, may testify thereto.

The facts or data upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing and must be of a type reasonably relied upon by experts in the field in forming opinions or inferences upon the subject and must be otherwise reliable, the facts or data need not be admissible in evidence. Section 490.065, RSMo; Courtroom Handbook on Missouri Evidence, Wm. A. Schroeder, Sections 702-505, pp. 325-350; Wulfing v. Kansas City Southern Industries, Inc., 842 S.W.2d 133 (Mo. App. E.D. 1992).

Complainant's Burden of Proof

In order to prevail, Complainant must present an opinion of market value and substantial and persuasive evidence that the proposed value is indicative of the market value of the subject property on January 1, 2001. Hermel, Inc. v. State Tax Commission, 564 S.W.2d 888, at 897. Substantial evidence can be defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See, Cupples-Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo. 1959). Persuasive evidence is that evidence which has sufficient weight and probative value to convince the trier of fact. The persuasiveness of evidence does not depend on the quantity or amount thereof but on its effect in inducing belief. Brooks v. General Motors Assembly Division, 527 S.W.2d 50, 53 (Mo. App. 1975).

Respondent's Burden of Proof

Respondent, when advocating a value different from that determined by the original valuation or a valuation made by the Board of Equalization, must meet the same burden of proof to present substantial and persuasive evidence of the value advocated as required of the Complainant under the principles established by case law. Hermel, Cupples-Hesse, Brooks, supra.

Methods of Valuation

Missouri courts have approved the comparable sales or market approach, the cost approach (replacement or construction) and the income approach as recognized methods of arriving at fair market value. St. Joe Minerals Corp. v. STC, 854 S.W.2d 526, 529 (App. E.D. 1993); Aspenhof Corp. v. STC, 789 S.W.2d 867, 869 (App. E.D. 1990); Quincy Soybean Company, Inc., v. Lowe, 773 S.W.2d 503, 504 (App. E.D. 1989), citing Del-Mar Redevelopment Corp v. Associated Garages, Inc., 726 S.W.2d 866, 869 (App. E.D. 1987) and State ex rel. State Highway Comm'n v. Southern Dev. Co., 509 S.W.2d 18, 27 (Mo. Div. 2 1974).

Personal Property Assessment Ratio

Personal property is assessed at thirty-three and one-third percent (33 1/3) of its true value in money. Section 137.115.1, RSMo.

Complainant's Evidence Substantial and Persuasive to Establish Value Advocated

The opinion of value presented by the Chantal appraisal and supplemental appraisal (Exhibits A and F; Exhibit H; Tr. 18, Line 10 - Tr. 35, Line 25) reached the level of substantial and persuasive evidence in this appeal to establish the total value for the subject property of $2,114,000. Mr. Chantal, as an Accredited Senior Appraiser with the American Society of Appraisers, possesses extensive training, experience and expertise in the valuation of machinery and equipment that has been developed over more than twenty-six years of machinery and equipment appraisal. The two approaches used by Mr. Chantal, the cost and market, are recognized and employed by machinery and equipment appraisers routinely to arrive at indicated values for property being valued.

The cost approach employed by Mr. Chantal, of indexing and applying depreciation factors relying on Marshall and Swift Valuation Service, was an appropriate form of the cost approach for the existing appraisal problem. It is a form of the cost approach for machinery and equipment that is used within the appraisal industry. The Marshall & Swift indexing and cost factors are based upon market studies which are performed for various types of industries. They are one methodology that is available to an appraiser in establishing values of machinery and equipment. As between Mr. Chantal's cost approach and the cost methodology relied upon by Mr. Boynton, the Chantal approach is superior and constitutes substantial and persuasive evidence upon which a finding of value can be made.

In like manner, the market approach utilized by Mr. Chantal was based upon sales of identical or similar items of machinery and equipment. The appraiser relied upon nationally recognized data sources in performing the market portion of his appraisal. These sources are recognized by machinery and equipment appraisal experts to be reliable and are regularly used by such experts. Complainant's market methodology, like its cost approach, presented a superior valuation as compared to the Boynton market approach.

Respondent's Evidence Not Substantial and Persuasive to Establish Value Advocated

The evidence proffered through the Boynton methodologies for valuation does not constitute substantial and persuasive evidence upon which a finding of fair market value can be made in this appeal. There are various reasons and factors which lead to this conclusion. Respondent's appraiser actually utilized a combination of four methods of valuation. These methods are described by Mr. Boynton as cost, market, cost/market and extraction. The shortcomings in each of these in the valuation presented by Mr. Boynton are addressed hereafter.

Respondent's Cost Approach

The cost approach was to trend the original cost of the items valued by this method using the Marshal & Swift Cost Indexes Guide for January 2001. However, Mr. Boynton elected to not use the Marshall & Swift depreciation tables as did Mr. Chantal. Mr. Boynton simply applied his own depreciation factor based upon his observation of condition, age and operator comments at the time of inspection. His depreciation of each item of machinery and equipment valued under his cost approach was based solely on his own analysis and not upon any market data or studies. Tr. 59, Line 22 - Tr. 60, Line 2. Essentially, the depreciation applied related only to Mr. Boynton's observed physical condition.

A review of the items asserted to have been valued under this cost approach reveals that the range of depreciation indicated for physical condition was from 10% to 50%, of the trended value to arrive at the RCLND (reproduction cost new less depreciation). Exhibitx 2a & 2b. However, upon careful analysis, it was determined that the market value determined by Mr. Boynton was not generally reflective of RCNLD, but often times varied significantly from that figure for items valued under his cost methodology. The total RCNLD for the 71 items valued under the cost approach alone was $1,856,150. However, the market value used by Respondent's appraiser for these 71 cost valued items was $1,679,225. In other words, on the whole an additional 9.5% ($1,856,150 - $1,679,225 = $176,925/1,856,150 = .095) was taken as some form of additional depreciation after RCNLD was calculated under Mr. Boynton's cost approach. There is no explanation or basis given as to how this additional depreciation was determined on the whole or on given items. There is no evidence in the record from which it can be concluded that Mr. Boynton researched the market to attempt to establish either functional or economic obsolescence to be applied to the machinery and equipment valued under his cost approach. The only conclusion that can be reached is that the actual determination of the market value for the 71 cost valued items was an arbitrary decision of Mr. Boynton.

An examination of the individual items values by Respondent's cost approach, shows great variances and inconsistencies between the RCNLD and the amount determined to be market value for the various items.

The following are given by way of illustration of this inconsistency.

This appears to be a simple rounding up to the next $100. Such would be appropriate, although, generally a rounding to the closest $10 or $100, either up or down as the case would warrant would be the preferable method of rounding. In this instance the value would be rounded to $12,940 or $12,900.

In this instance, this cannot be considered to be a matter of rounding. It must be concluded that additional depreciation was applied in the amount of $730. However, there is no indication of the basis for applying an additional 8.4% depreciation

In this case, if Mr. Boynton was actually relying on his cost approach of RCNLD, which only accounted for his physical depreciation, in this instance physical depreciation is shown to be 20% from the indexed cost of acquisition, the indicated market value would simply be $170,610. However, once again some form of additional deduction is made of 12.1%. There is no basis or explanation as to the source for this additional adjustment.

This illustration shows not an additional deduction for depreciation, but an adding of nearly $3,000 in value to the RCNLD. This 15.9% increase in value over the RCNLD calculated by Mr. Boynton is not explained, nor is there a basis as to why an upward adjustment of this size is warranted. Furthermore, this particular asset was acquired in 1999 at a cost of only $14,052, which means that the opinion of value proffered by Respondent indicates an increase in value in two years of 6.75%. However, there is no market data to substantiate any such increase. Evidence from L & M - The Book shows that such a piece of machinery was selling for only $7,500. Exhibit A, p. 14, Line 14. A further problem with this asset is that it is also identified on Line 4, of Exhibit 2b, p. 1 as having been acquired in 1999 at a cost of $14,052, with a calculated RCNLD of $1,2938 (1.023 index and 10% depreciation) and the indicated market value by Mr. Boynton is $14,000. No explanation is given as to why the same asset is apparently valued twice at two different values.

Such inconsistences and discrepancies cast serious doubt on the cost methodology developed by Mr. Boynton. These illustrations are generally reflective of the relative weakness of the values arrived at by Mr. Boynton by means of his cost methodology. Due to these shortcomings, no probative weight can be given to the values thereby determined.

Respondent's Sales Listing Approach

Turning next to the sales analysis used by Respondent's appraiser, similar problems as plague the cost approach are likewise present in this methodology. The data which Mr. Boynton used in his sales approach was not actual sales of manufacturing machinery and equipment. He instead elected to use sale listing prices from used equipment dealers. Generally, he would apply a 10% downward adjustment to arrive at an adjusted value. However in only 9 out of 25 instances where only this sale listing method was used did the value determined by the appraiser as the market value actually correspond with the adjusted listing value. The following examples provide illustration of variances between what the listing data relied upon by Mr. Boynton showed and the market value determined for the valuation.

There are 5 entries for various sizes of cotter rolling machines on pages 5 and 6 of Exhibit 2b. These machines are valued relying on the listings shown in Exhibit 11 as entries 112 and 115. Photographs of the subject machines are found in Exhibit 10, roll 10, photos 16 - 20. Entry 112 shows a photograph of a Vaughn wire drawing machine, model and serial number are provided, along with other information relative to the machine. Entry 115 has no photograph, but contains information on a 10 Strand Waterbury Ferrel Tandem wire mill. No model or serial number is provided.

The list price on both the Vaughn wire drawing machine and the Waterbury wire mill is $35,000. Mr. Boynton applied a value of $15,000 for each of the five subject machines based upon this listing data. However, the most cursory review of the photographs of the subject machines and the photograph provided for Data Base Entry # 112 shows the alleged comparable piece of machinery is not the same as the subject cotter rolling machines. Since no photograph was available for Entry # 115, there is no way to determine if the subject machines are in fact 10 Strand Waterbury Farrel Tandem wire mills.

Mr. Boynton did not provide any listing of a manufacturer, model or serial numbers for any of the subject machines. The Hearing Officer notes that Mr. Chantal does not always provide such information in his appraisal reports. The Hearing Officer recognizes that machinery and equipment appraisers generally retain in their work files information on manufacturer, models and serial numbers on the items of property being valued.

It is also understood it would create an unnecessary burden to have appraisers file as exhibits the entirety of their work files in contested cases before the Commission. It would also needlessly clutter the files of the Commission and the State Archives to have the entirety of data sources relied upon by an appraiser to become part of the record in each personal property appeal. At the same time, the Hearing Officer observes that it generally makes for a more complete and more persuasive appraisal report to have manufacturer name, serial and model numbers listed where they can be obtained from the inventoring of the property to be appraised.

This item is listed as a 1/4 ton (500 lb) Bidgit Hoist. A photograph of the item is found in Exhibit 10, Roll 10, Photo 13. Entry 9-20 of Exhibit 11 is shown as the data source for Entry # 19, as well as the other 12 items covered as 9-20. The only hoist item shown on Entry # 9-20 is a 30,000 pound crane scale. No price is given, the initials P.O.R are provided (Price On Request).

From the data provided there is no way to make any meaningful and persuasive correlation to determine a value for a 500 pound hoist from data on a 15 ton crane scale. Even assuming that the list price of the 15 ton crane scale was $1,250, there is no means to determine the basis employed to reduce the value by 60% to find a value for the 1/4 ton hoist. Quite simply the difference that exists between the item of property being appraised and the property shown as the listing are to great for the listed property to either be used or relied upon to determined value. This same sales listing information is referenced for 3 - 1/2 ton Hitachi hoists listed just above the 1/4 ton hoist.

It appears what Respondent's appraiser may have actually done is to rely upon his cost analysis the 3 - 1/2 ton hoists listed just above the 1/4 hoist in his report. However, these 3 hoists are simply referenced as being the same hoist in the roll 10, photo 13 in Exhibit 10 and as supported by the same Data Base Entry # 19 in Exhibit 11. Photo 13 only shows 1 hoist, not 3 (3-1/2 ton and 1-1/4 ton). The only difference being that cost data is provided showing the 3 hoists having be acquired in 1986 at a cost of $2,000 each, the RCNLD value derived by Mr. Boynton for each hoist was $1,349. Under the appraiser's sales listing data he indicates a value of $1,250 based on Data Entry # 19. There is an adjusted value for each of the 3 hoists to 1,000 and then a market value of $500.

Respondent's Exhibit 5A, page 8 of 16, shows the entry for asset 177 to be a 1/2 ton hoist, not 3 hoists, acquired in 1986 at a cost of $1,000, not $2,000. The cost to acquire the asset being valued was overstated by $1,000 and the number of items to be appraised was overstated by 2. This error may have simply resulted from a computer malfunction in the development of the spreadsheet.

The items of equipment shown for this illustration consist of 2 Sullair Compressors. According to Mr. Boynton's valuation ($15,000 each), his sales listing data to support the value is from Exhibit 11, Data Base Entries 10-13. Line 6 of Exhibit 2b, p. 4 provides the serial numbers for each of the 2 compressors. Upon review of Entries 10-13 in Exhibit 11, the page covering entries 9 through 20, there is neither a listing of air compressors, nor a range of values for air compressors from $8,000 to $10,500. The two compressors are listed by Mr. Chantal's appraisal as being valued at $2,700 each, relying on L & M - The Book. Exhibit F, p. 11, Items 110 & 111.

As a result of the various problems shown by these examples, the sales listing methodology relied upon by Respondent's appraiser can be given no probative value in arriving at the fair market value of the items of property valued under this method.

Respondent's Valuation Under Cost and Sales Listing Methods

The largest number of items of machinery and equipment valued under Mr. Boynton's valuation were indicated to be based on both his cost and sales listing methods. The same general shortcomings detailed above concerning the cost and sales listing methods are likewise present for the 181 items valued in this fashion. The Hearing Officer will not give specific examples which would only duplicate the illustrations detailed above, only on differing items of machinery and equipment. Suffice it to say that the weaknesses all ready noted only combine to render the valuations derived by this procedure to be also unsubstantial and unpersuasive evidence upon which a finding of fair market value can be made.

Respondent's Valuation Using Extraction Method

The final methodology relied upon by Mr. Boynton was labled by him as extraction or extrapolation. This means was employed to place values on 88 different items of property in Exhibit 2b, or nearly 25% of the total number of items valued in Exhibits 2a and 2b. No explanation as to this method of valuation was provided in the written appraisal report or the written direct testimony of the appraiser. Tr. 62, Lines 20-21; Tr. 64. Line 23 - Tr. 65, Line 5. Mr. Boynton did give his explanation in response to inquiries from the Hearing Officer. The Hearing Officer characterized the method as extrapolation, instead of extraction. Tr. 65, Line 6 - Tr. 67, Line 5.

The values arrived at by Mr. Boynton's extraction were for items that were not on any list provided by the Complainant. Mr. Boynton had no reference to any original cost, so he took the original cost from what he deemed to be similar items on a list provided by Complainant, or from items deemed to be similar from information on the internet or equipment manufacturers. However, he had no direct cost or market information on the equipment valued by extraction. This was the appraiser's method of extraction.

The Hearing Officer has researched two texts which are recognized to be authoritative in the field of machinery and equipment appraisal. They are: Appraising Machinery and Equipment, Machinery and Equipment Textbook Committee of the American Society of Appraisers (1989) and Valuing Machinery and Equipment, Machinery and Technical Specialities Committee of the American Society of Appraisers (2000). The review of these two texts was for the purpose of determining how extraction or extrapolation is to be applied in an appraisal of machinery and equipment. In the more than two dozen appeals previously heard by the Hearing Officer, no expert had ever valued property relying on a method known as either extraction or extrapolation. No heading or subheading was found in the index of either text for a method of valuing machinery and equipment known as extraction or extrapolation.

The values arrived at by Respondent's appraiser based on his extraction system are not established to have been derived under any methodology that is recognized by experts in the field of machinery and equipment appraisal. The values achieved by Mr. Boynton's extraction find no basis or support in any market data. They are simply conclusions of value, unsupported by methodology or data, as such, they possess no probative value.

Auction Data Appropriate Data For Use By Expert

The matter of whether data derived from auction sales should be utilized in arriving at the fair market value of machinery and equipment is a subject over which it is unlikely that assessors and taxpayers will ever agree. This topic has been before the Commission in various forms in a number of appeals. It has been addressed on a number of occasions in other decisions. An Accredited Senior Appraiser, other than Mr. Chantal, has testified on more than one occasion before the Commission of the appropriate utilization and reliance on auction data in valuing machinery and equipment. See, Leonards Metal v. Zimmerman, STC Appeals 00-33002 & 00-33003 (116/01 - Affirmed by Commission, 4/16/02); T. G. Missouri v. White, supra, Finding of Fact 10.

In the present appeal, rebuttal testimony was presented by Complainant's Counsel in response to testimony by Respondent's appraiser relative to auction sales data. The rebuttal testimony was by Mike Clark, President of L & M Publications, publisher of the Book, pricing guide for used industrial machinery and equipment. The testimony of Mr. Clark establishes the methodology utilized in collection of sales data from auctions by his staff and the basis upon which machinery and equipment appraisers rely upon The Book's data as an authoritative and reliable source for the valuation of machinery and equipment. Tr. 83, Line 6 - Tr. 96, Line 24.

There are approximately 150 machinery and equipment Accredited Senior Appraisers in the United States, 120 of them subscribe to L & M's reporting services. In addition, financial institutions, leasing companies, auctioneers, machinery dealers, governmental agencies, municipalities and manufacturers also subscribe to the services. L & M covers and reports on all types of machinery and equipment in all sorts of industries.

In 2000 there were approximately 1,400 significant industrial auctions in North America. A significant industrial auction is one conducted by an auctioneer firm which specializes in selling industrial equipment. In 2002 the number had increase to approximately 1,800 such auctions. The number of used machinery dealers in the country in 2001 was about 370. In 2002, the staff of L & M covered 919 auctions. The total revenue generated from industrial auctions in 2002 was projected to be $600,000,000. Mr. Clark estimated gross revenue for used machinery dealers as an aggregate at between $50 and $80,000,000. In Mr. Clark's opinion the machinery and equipment market in the United States is the auction market.

When covering auctions, L & M obtains all the pertinent information regarding the machinery and equipment being sold. L & M only covers and utilizes data from significant auctions. Significant auctions are conducted by professional auctioneers who are knowledgeable and experience in how to market the sale. Such auctioneers send out a significant number of auction brochures. Advertisements in trade magazines are run prior to the sales. Phone contacts are made by the auctioneers to manufacturing firms that would be interested in the equipment being sold at the upcoming auction.

Industrial auctions are not distress sales. Nor are industrial auctions ever advertised as absolution auctions. The seller has a right to protect the equipment by taking it off the auction block, or no selling if the highest bid received is not representative of what they feel should be the market value. The buyers at industrial auctions are knowledgeable employees of the plant from which they have come. They understand what the various pieces of equipment do and what it is worth to them. Auction buyers have done their homework on the equipment they are interested in buying. Auction prices are representative of willing sellers and knowledgeable buyers.

Sellers or their representatives, plant managers or a comparable person, are present at industrial auctions 75 to 80 percent of the time. These auctions are generally conducted on Tuesday, Wednesday and Thursday in a given week. There is generally a three day inspection period before a Tuesday auction, that being the Thursday, Friday and Monday preceding the auction. During the inspection time buyers are free to view and inspect the machinery and equipment. They can have it powered up under the supervision of a seller representative. Normally, on the day of the auction machines are not turned on.

Conclusion

The Hearing Officer has the duty to evaluate the evidence presented to determine its sufficiency and persuasiveness in establishing market value. The opinion offered by Complainant's appraiser evaluates the marketplace, market supply and demand elements, sales of like or similar equipment, and calculates most equipment values based upon the most comparable market data. Complainant's evidence provides a persuasive indication of how and what price the subject machinery and equipment would sell. Complainant's evidence is substantial and persuasive in support of the proposed market values.

Respondent's evidence presented insufficient market data to overcome or rebut Complainant's market data and cost approach. The analysis and comments set out in this decision relative to the methodology employed by Respondent's appraiser illustrate the various shortcomings and flaws contained in the valuation presented by Respondent which rendered it unsubstantial and unpersuasive to rebut the presumption of correct assessment by the Board and to establish the value proposed. Likewise, Respondent's evidence was insufficient to affirm the Assessor's original valuation, which was sustained by the Board.

The evidence on this record presented by Complainant was sufficient to rebut the presumption in favor of the Board of Equalization and to establish the value advocated by Complainant's expert.

ORDER

The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Jefferson County for the subject tax day is SET ASIDE.

The assessed value for the subject property for tax year 2001 is set at $704,670.

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision. The application shall contain specific grounds upon which it is claimed the decision is erroneous. Failure to state specific facts or law upon which the appeal is based will result in summary denial. Section 138.432, RSMo 1994.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the Commission. If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal. If any or all protested taxes have been disbursed pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED June 3, 2003.

STATE TAX COMMISSION OF MISSOURI

W. B. Tichenor, Chief Hearing Officer